Key highlights of Malaysia´s Finance Bill (No. 2) 2023

       

      

The new CGT rules will be effective as of 1 January 2024. CGT returns are to be filed electronically and paid within 60 days from the date of disposal. 

     

​Scope	​Capital assets situated in Malaysia, i.e., shares in unlisted companies incorporated in Malaysia; or (ii) shares in foreign incorporated company deriving value from real property in Malaysia.  All types of capital assets situated outside Malaysia.
​Taxable persons	​Companies, LLPs, Co-operatives, Trust Bodies (including Unit Trusts)
​Tax rates	Capital asset situated in Malaysia  Acquisition date before 1 January 2024 – 2 % on gross disposal price or 10 % on net gain (chargeable income)      Gains from disposal of all types of capital assets situated outside Malaysia, remitted into Malaysia Based on prevailing income tax rate of the taxpayer.
​Acquisition and disposal date	​Disposal Date  Date of agreement (where there is a written agreement)  Date of completion of disposal (where there is no written agreement)       Acquisition Date  Deemed to coincide with the date of disposal by the disposer to the acquirer.  Where the disposal or acquisition is subject to approval from the Government, the disposal or acquisition date will be the date of such approval, or where the approval is subject to conditions, the date of the last of all such conditions being satisfied.
​Capital losses	​Capital losses may be used to offset against the gains from disposal of other capital assets.         Any capital losses accumulated can be carried forward for up to 10 years of assessment to be offset against future gains from disposal of capital assets.

     

The Finance Bill will incorporate the legislative provisions of the  Global Anti-Base Erosion (“GloBE Rules”) under BEPS Pillar 2 which will include the rules for Domestic Top-up Tax (“DTT”) and Qualified Domestic Minimum Top-up Tax (“QDMTT”) into Malaysian tax legislations which will be implemented in 2025. 

    

The GloBE Rules include new taxing rights over undertaxed profits of any entity within a Multinational Entity (“MNE”) group with global revenue of at least EUR 750 million per annum which are taxed below the globally agreed minimum tax rate of 15 %. 

    

The GloBE rules will impose a top-up tax for the difference between jurisdictional effective tax rate and the 15 % minimum tax rate, operating via the Income Inclusion Rules (“IIR”) to provide Malaysia with the taxing right to collect the top-up tax where the group’s ultimate parent entity is located in Malaysia. 

    

​In-scope	​Constituent Entities (“CE”) of an MNE Group which has at least one entity or permanent establishment that is not located in the same jurisdiction as its ultimate parent entity, and the ultimate parent entity’s consolidated financial statement revenue is EUR 750 million or more in at least 2 of the 4 financial years immediately preceding the tested financial year.
​Exclusion	​Government entities, international organisations, non-profit organisations, pension funds, investment fund that is an UPE, international shipping income, real estate investment vehicle that is an UPE, and (subject to conditions) an entity that is 85 % or 95 % owned by any of the above entities (except a Pension Service entity).
​Filing of GloBE Information Return ("GIR")	​To be furnished no later than 15 months after the last day of the Reporting Financial Year.

      

An MSME will be required to observe an additional condition in order to qualify for the preferential tax treatment, i.e., not more than 20 % of the company’s paid up capital in respect of ordinary shares at the beginning of the basis period for a year of assessment is owned directly or indirectly by one or more companies incorporated outside Malaysia; or individuals who are not Malaysian citizens. 

    

Unilateral tax credit will no longer be available for income that is treated as derived from Malaysia under the Malaysian Income Tax Act that has suffered foreign tax from a non-DTA country. 

   

     

Effective 1 January 2025 self-assessment system will be implemented for RPGT. 

    

​RPGT Return	​Submission of RPGT return is required within 60 days from the date of disposal and may be furnished electronically.  The RPGT return furnished by the disposer is deemed to be an assessment made by the DGIR.
​Amending a return	​Where a disposer understates its RPGT payable, the disposer is allowed to submit an amended RPGT return within 6 months from the due date for submission of the RPGT return; and is deemed to be an additional assessment made by the DGIR.  Any additional RPGT payable is subject to an increase of tax equal to 10 % of the additional RPGT payable.
​Additional assessment	​The Director General of Inland Revenue (“DGIR”) may raise an additional assessment for any understatement of RPGT within 5 years after the end of that YA. The Director General of Inland Revenue (“DGIR”) may raise an additional assessment for any understatement of RPGT within 5 years after the end of that YA.
​Record keeping	​Documents must be kept for a period of 7 years from the end of the YA in which the deemed assessment was raised.